LAHORE: Terming inaccurate statistics regarding illicit trade in Pakistan as a significant barrier to making effective economic decisions and formulating policies, analysts said that accurate and unbiased data are crucial for understanding the true magnitude of illicit trade and its impact on various sectors of the economy.

“The need for government-level research to determine the scale of illicit trade in the country is crucial,” said Osama Siddiqui, a macroeconomic analyst. He emphasized that precise and unbiased estimates from federal and provincial governments are essential for making informed decisions and developing policies aimed at addressing the challenges posed by illicit trade.

Illicit trade including smuggling and under-invoicing poses serious problems for legal industries and businesses. The tyre and tobacco industries, in particular, suffer substantial losses due to illegal trade. For example, the local tyre industry estimates that over 50 percent of tyres sold in the market are smuggled, resulting in significant financial losses to the national exchequer, analysts said, adding: “The tobacco market is plagued by illegal and tax-evading brands, causing substantial revenue losses.”

Former chairman FBR Shabbar Zaidi had earlier claimed that the market share of illegal cigarettes in Pakistan was 30 percent, while international research institutes and the tax-paying cigarette sector suggest it has reached 40 percent.

Prime Minister Shehbaz Sharif also acknowledges that illicit tobacco causes losses of over Rs. 100 billion annually to the national exchequer.

According to experts, decisions based on inaccurate data can inadvertently benefit illegal trade. Instead of prioritizing tax measures that drive up prices for legally sold products, policymakers should focus on cracking down on illicit tobacco trade.

To address this issue effectively, Osama Siddiqui added that it is crucial for the federal and provincial governments to undertake comprehensive research to identify the true size of the illicit sector, its beneficiaries, and its supporters. By conducting thorough investigations and taking disciplinary action against those providing misleading statistics, the government can ensure that economic decisions are based on accurate and verified data, he concluded.

Copyright Business Recorder, 2023